Apria Healthcare jumps on UBS upgrade

LOS ANGELES (MarketWatch) -- Shares of Apria Healthcare Group Inc. jumped as much as 9% Monday, rallying as the provider of home medical equipment was upgraded by a UBS Investment analyst.

Apria's shares climbed $1.65, or more than 7%, to $24.75 in recent trading, after having reached an intraday high at $25.20. They set a 52-week low at $20.11 on Dec. 11.

UBS analyst Donald Hooker lifted his rating on the company
AHG, +1.10%
to neutral from sell.

In a note to clients, Hooker pointed out that there was concern Lake Forest, Calif.-based Apria, which specializes in home respiratory therapy, was vulnerable due to possible Medicare cutbacks in oxygen reimbursements.

"It increasingly appears to us the House may accept a Senate-originated Medicare package, which would likely be more 'provider friendly' in nature," Hooker said. "Granted, the situation remains fluid; however, with valuations at low levels and reimbursement negotiations leaning in a positive direction we believe it is prudent to upgrade."

He added that proposals to allow reimbursement for at-home treatment of sleep apnea would be a further positive for Apria. The company gets 16% of hits revenue from related treatments, Hooker said.

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